The CAISO Board of Governors and Governing Body of the ISO’s Western Energy Imbalance Market voted unanimously Friday to approve a new delegation of authority over EIM matters, including a process by which FERC could resolve disputes between the two bodies.

The adopted decision resulted from a stakeholder process in which the EIM Governance Review Committee (GRC) considered revisions to EIM rules under a reassessment required by the market’s founding charter.

“Because the Western EIM will continue to expand and evolve, the important steps we’ve taken today help make sure we have the right governance structure in place for greater collaboration and coordination among the growing Western EIM membership and the California ISO,” CAISO Board Chair Angelina Galiteva said in a statement following the vote.

The vote dealt with the second, more controversial component of the GRC’s recommendations about relations between CAISO and its real-time interstate trading market, made up of entities from across the West. The two bodies approved a first set of changes in May that covered topics such as the selection of EIM Governing Body members and stakeholder engagement. (See CAISO Board Approves EIM Governance Changes.)

Both sets of changes were generally supported by stakeholders, though some expressed concern about FERC intervention in Western disputes. (See Joint CAISO-EIM Authority Debated in West and Solid Support for EIM Joint Authority Plan.)

The expanding EIM now includes 14 participants in addition to CAISO, with more scheduled to join in the next two years. Its footprint encompasses portions of 10 Western states.

CAISO said the market has saved members more than $1.4 billion since its launch six years ago.

Expanded EIM Authority

Friday’s decision increases EIM authority over issues affecting the market. CAISO tariff changes that apply to the EIM and its stakeholders now will require Governing Body and Board of Governors approval. The new shared authority will be exercised at joint meetings of the two groups, with decisions requiring majority approval by both.

“Currently, the EIM Governing Body has primary authority only for changes to real-time market rules that are EIM-specific, meaning that they apply uniquely or differently to EIM entity balancing authority areas, or for changes to generally-applicable real-time market rules where the primary driver for the change is an issue specific to the EIM entity balancing authority areas,” CAISO Vice President of External and Customer Affairs Stacey Crowley wrote in a memo to the governors and Governing Body members.

“In practice, this has meant that some tariff proposals that apply to EIM Entities or to other market participants within EIM balancing authority areas in their role as EIM participants have been outside the EIM Governing Body’s approval authority,” Crowley said.

The GRC recommended expanding the Governing Body’s scope, “so that the applicability of a proposed tariff rule in the EIM context determines whether or not it is subject to approval by both bodies,” she said.

The Board and Governing Body adopted the GRC’s recommendation that joint authority should extend to all proposals to “change or establish any CAISO tariff rules applicable to the EIM entity balancing authority areas, EIM entities, or other market participants within the EIM entity balancing authority areas, in their capacity as participants in EIM.”

In the event the two bodies cannot agree on a course of action, the revisions lay out a process that could, in rare circumstances, refer matters to FERC for dispute resolution.

In the case of an impasse, an additional staff and stakeholder process would be undertaken to resolve the matter. If that does not work, the Board of Governors and Governing Body could agree to abandon the proposal or remand it for another round of stakeholder consideration.

“Alternatively, the Board alone could authorize a FERC filing if, and only if, three conditions are met: (1) the Board, by unanimous vote, makes a finding that the bodies have reached an impasse and that exigent circumstances exist such that a revision to the tariff is critical to preserve reliability or protect market integrity; (2) the ISO would be required to include in its FERC filing any written opinion or other statement the EIM Governing Body may want to offer regarding the proposal; and (3) the EIM Governing Body would have the option to retain outside counsel to assist in preparing its written opinion or statement,” Crowley wrote.

‘A Turning Point in Collaboration’

On Aug. 2, when the GRC approved its own recommendations, GRC Chair Therese Hampton said the multistep dispute resolution plan “provides a strong incentive for both boards to resolve differences before going to FERC while also recognizing that there may be some circumstances where a filing is needed.” (See EIM Governance Review Committee OKs Power Share with CAISO.)

In the joint CAISO-EIM statement Friday, Governing Body Chair Anita Decker said that “the Western EIM’s Governing Body and the ISO’s Board of Governors approval of the Governance Review Committee’s recommendations is an important milestone and marks a turning point in collaboration and decision-making that will benefit an expanded Western market.”

“The Governance Review Committee’s recommendation was founded in substantial stakeholder engagement and symbolizes a dynamic time for the West,” Decker said. “We commend the Governance Review Committee’s impressive effort to work together with stakeholders to create this framework.”

The CAISO governors next must make implementing amendments to governance documents. The EIM Governing Body is scheduled to provide its advisory opinion on the amendments Sept. 8, followed by the Board of Governors’ consideration on Sept. 22.